Congress Looking To Foster Diversity In Ownership

Congress is revisiting the Minority Tax Certificate program, aiming to foster diversity in broadcast ownership. 

The program, which was abolished over 25 years ago, provided broadcasters with an economic incentive to sell their stations to minority owners. Instead of directly subsidizing potential owners, the certificate offered a tax break to sellers who sold their broadcast stations to minority-owned businesses, even if there were multiple bidders for those properties. 

Here’s how it worked:

Tax Benefit: If a seller sold their station to a minority-owned business, they could roll the proceeds from the sale over into a new media property without recognizing taxable gain. Unlike typical like-kind exchanges, which require a quick rollover, the tax certificate allowed several years for this transition.

Increased Diversity: The policy encouraged sales to minority-controlled companies, leading to increased diversity in broadcast ownership. Hundreds of radio and TV stations changed hands under this program during its existence.

Challenges and Abandonment: Critics raised concerns about race-based set-asides and potential exploitation by non-minority companies. Ultimately, the program faced opposition due to a proposed mid-1990s sale of a major cable company to a minority-controlled buyer, where significant tax deferrals would have occurred. Congress decided to discontinue the program.

Now, with revised bills in both the House of Representatives and the Senate, the minority tax certificate is back in the spotlight, reigniting discussions about its potential revival.